ICRRS of manufacturing sector customers of The City Bank Limited – corporate banking division

Abstract

"Before making loans to its industrial clients, the corporate banking divisions of CBL have a robust risk management framework in place. The internal credit risk assessment method used by this system, which combines quantitative and qualitative factors to calculate each client's credit rating and the appropriate loan limit, is a vital element. A thorough financial investigation is conducted by the bank to determine a client's creditworthiness. This necessitates a thorough examination of the client's income statement, balance sheet, and cash flow statement. Along with other factors including cash flow, profitability, solvency, liquidity, and past financial performance, changes in sales, costs, and profitability are also taken into consideration. The internal credit risk evaluation method includes both financial analysis and a comprehensive company inquiry. The bank assesses the client's competitive landscape, market share, and business plan. It evaluates the client's business plan and takes into account how well the client can adapt to shifting market conditions. Additionally, this analysis considers elements like the product mix, clientele, distribution channels, and pricing strategy. Industry research is also an essential element in the evaluation of credit risk. The bank takes into account the overall size of the industry, its future development potential, and the regulatory environment. Another factor the bank considers is the client's position in the market, including their market share and competitive advantages. To ascertain the risks associated with extending credit to a customer, the bank conducts a risk analysis. This involves considering the customer's credit history, the existence of any collateral that may be used to lower risk, and any other relevant factors that might have an effect on the risk of default. By employing this extensive method of credit risk assessment, CBL wants to ensure the stability and profitability of the bank and its industrial partners while enabling it to make informed decisions when giving loans to its clients."